MindBody seeks to raise at least $117 million in second stock offering

MindBody Inc., which raised $100.1million two years ago when it went public, is now offering more shares that it hopes will raise $116.7million to $134.3million. The money would be used to finance possible acquisitions or for more general purposes, such as operating and capital expenses.

The publicly traded company announced its offering of 4.4million shares of Class A common stock May 22 in a filing with the U.S. Securities and Exchange Commission. Financial institutions that are underwriting the sale will be able to buy up to 660,000 additional shares.

The stock will be offered at $27.95 per share until May 31.

On Friday, the stock closed at $28.40 per share, up 40 cents.

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The San Luis Obispo-based company makes online management software that helps owners of beauty, health and wellness businesses to seamlessly schedule appointments, process payments or manage staff. It employs about 1,300 employees — most in San Luis Obispo. More than 60,000 businesses and 356,000 wellness practitioners in more than 130 countries use its software.

When MindBody went public on the Nasdaq exchange June 19, 2015, it sold 7.15million shares at $14 per share.

Since then, the company has grown annual revenue and reduced its annual net loss.

Rick Stollmeyer, co-founder and CEO of Mindbody, leads a tour of the San Luis Obispo-based software company's headquarters on Tank Farm Road in April 2015.

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In 2016, its revenue was $139 million, up 37percent from 2015. Its net loss was $23million in 2016, compared with a net loss of $36million in 2015. Looking ahead, it expects revenue for 2017 to be between $179million and $182million, up 29 to 31percent, and a net loss of between $5million and $8million.

The company has also continued to push for a more global audience.

In the first quarter ended March 31, MindBody focused sales and marketing resources not only in the United States, but also Canada, the United Kingdom, Ireland, Australia, New Zealand, Hong Kong and Singapore, according to its SEC filing.

In the filing, MindBody said the money from the offering will “increase our capitalization and financial flexibility for, among other things, for possible acquisitions of complementary businesses, products, services or technologies.”According to the document, the company doesn’t have any commitments for possible acquisitions at this time.

“We plan to continue to enhance our software architecture and enhance and expand our platform through ongoing investments in research and development and by pursuing strategic acquisitions of complementary businesses and technologies that will enable us to continue to drive growth in the future, including investments we expect to make in connection with our recent acquisition of Lymber Wellness Inc,” according to the SEC filing.

The company acquired Lymber Wellness Inc., a San Diego-based company specializing in market demand software, in March.

A MindBody representative declined to comment on the filing, saying the company is not allowed to comment in the midst of a public offering.

The ability to go out for a second offering is a good sign for the company, said Kathleen Smith, principal at Renaissance Capital, a Greenwich, Connecticut, provider of IPO-focused exchange-traded funds that provides portfolio management of newly public companies.

“The stock has done really well, so they can offer it now and raise some growth capital,” she said. “Overall, it’s a good thing.”

Smith said despite a slow start when it went public in 2015 — the share price dropped 17percent on its first day — MindBody and other e-commerce companies have been doing well this year as investors realize that e-commerce services are becoming more popular with businesses and consumers.

MindBody CEO Rick Stollmeyer rings the bell at the Nasdaq exchange on the first day of trading for his company’s stock in 2015.

Christopher Galluzzo

“I think at first investors didn’t know what to do about MindBody,” she said. “I’d say now they are in the top of the pack. It’s in the top third.”

Smith noted that other larger e-commerce companies like Shopify and HubSpot have also reported strong years.

On Friday, Shopify, a Canadian company that develops computer software for online stores, was up roughly 226.9percent from the same day a year earlier, trading at about $90.74 per share. Massachusetts-based HubSpot, which makes software for inbound marketing and sales, was up 55.3percent, with $70.95.

Smith declined to say whether she would recommend the MindBody stock to potential buyers, saying she didn’t have enough information to do so, but did note that MindBody stock is in Renaissance Capital’s mutual fund portfolio.